{"id":1428,"date":"2015-06-04T01:49:00","date_gmt":"2015-06-04T01:49:00","guid":{"rendered":"https:\/\/www.thirdeyesight.in\/?p=1428"},"modified":"2022-09-01T01:54:06","modified_gmt":"2022-09-01T01:54:06","slug":"amit-agarwal-leads-amazon-india-as-online-retail-is-taking-off","status":"publish","type":"post","link":"https:\/\/myechoproject.com\/TES\/amit-agarwal-leads-amazon-india-as-online-retail-is-taking-off\/","title":{"rendered":"Amit Agarwal Leads Amazon India As Online Retail Is Taking Off"},"content":{"rendered":"\n

Saritha Rai, Forbes Asia
\n Bengaluru, 4 Jun 2015<\/i><\/p>\n

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In \n his blue jeans and crisp button-down shirt, Amit Agarwal, managing \n director of Amazon India, appears sartorially to mimic his boss, \n Amazon.com CEO Jeff Bezos. The two men also are diminutive in \n build and brisk in manner. Agarwal sounds like Bezos when he says \n that in Internet and online retail time, India is still on Day \n One.<\/p>\n

The likeness to Bezos is no artifice. Since getting a master’s \n degree from Stanford 18 years ago, Agarwal has spent most of his \n career alongside Bezos, even for a few years as his executive \n assistant and technical “shadow.” Now the 41-year-old \n computer engineer has been assigned to lead Amazon’s conquest \n of India, the world’s last remaining online retail citadel. \n India is vital as the global e-tailing leader has all but bombed \n in the other immense market, China.<\/p><\/div><\/div>\n

“Is it big? Check. Can we add significant customer value? \n Check. Can we generate significant cash flow? Check. India ticks \n all the boxes for Amazon,” Agarwal explains in conversation. \n Yet the man described by colleagues as a detail-oriented machine \n knows his work is cut out for him. “Everything is nascent \n in India–the seller ecosystem, the logistics, the payments \n … . We have to connect the dots on a massive scale that involves \n hundreds of cities, thousands of sellers and millions of products.”<\/p>\n

After two years the irrepressible global retailer has made noteworthy \n progress. It has partnered with 25,000 merchants of all hues, \n down to home entrepreneurs in little-known towns hawking fragrances \n and pet food. On its platform it offers 22 million products in \n thousands of categories ranging from gourmet foods to organic \n gardening supplies and minor coffee brands.<\/p>\n

In its Indian home base, Bangalore, it is pioneering ties with \n select neighborhood stores, or kirana as they are called, to deliver \n everyday items like sodas, spices and shampoo within four hours. \n This has won over shoppers like Sudeepta Banerjee, a businesswoman \n in the Whitefield suburb, who buys everything from art supplies \n for her daughter to curtains for her home on the platform. “The \n variety is good and the customer service is great; I am not going \n elsewhere in a hurry,” she says.<\/p>\n

Yet, despite the loyalty of such buyers, India at not yet $2 \n billion in yearly gross volume is still tiny for Amazon compared \n with its home U.S. market. “The country cannot contribute \n significant revenues to the parent for at least five more years,” \n said Gautam Chhaochharia, head of research in India at UBS and \n lead author of the recent report, “Is India in an e-commerce \n bubble?” The report says India’s e-commerce sales could \n exceed $50 billion by 2020 from $4.5 billion in 2014.<\/p>\n

By contrast, analysts put China’s online retail trade at \n $460 billion but reportedly find Amazon, even with a dozen warehouse \n hubs and thousands of employees, to have only 2%. The market is \n dominated by domestic giants, Alibaba’s Tmall and JD.com.<\/p>\n

India’s potential is too large to be ignored, and Amazon \n has a fighting chance despite domestic rivals having some years’ \n head start. It is distinguishing itself as a huge repository even \n as rivals focus on discounting, says Devangshu Dutta, chief executive \n of retail consultancy Third Eyesight. “Their recent mesmerizing \n ‘aur dikhao’ [show me more options] marketing campaign \n portrays a limitless store to match Indians’ compulsive aur \n dikhao buying behavior,” says Dutta.<\/b><\/p>\n

Its rivals, however, shoot holes in Amazon’s customer-focused \n strategy. “We believe that focusing on sellers yields higher \n rewards and creates better value for both sellers and buyers,” \n said Rohit Bansal, COO of Snapdeal, which has 150,000 merchants \n selling 12 million products, including items produced by entrepreneurs \n in one of the world’s largest slums, the Dharavi neighborhood \n in Mumbai.<\/p>\n

Amazon will not comment on its competitors. But it is trying \n to crush them with a three-pillared strategy–low prices, \n wide selection and fast delivery, says David Abikzir, chairman \n of Nymex Consulting in Bangalore. “In two years it has done \n what its competitors took seven years to do.” What none of \n them has done is make a profit.<\/p>\n

The heart of Amazon India’s operations is within a high-rise \n called World Trade Centre in the obscure Yeshwanthpur neighborhood \n in northwest Bangalore. Out of his 19th-floor office there, Agarwal \n and his core team plot moves to tame homegrown rivals like Snapdeal, \n backed by SoftBank, and Alibaba’s Alipay-backed Paytm.<\/p>\n

But the global retailer’s biggest challenge in the cutthroat \n market is Flipkart, launched seven years ago by two Amazon alums \n and dubbed, then, the Amazon of India. Flipkart’s backers, \n a who’s who of sector investors like New York’s Tiger \n Global, South Africa’s Naspers, the Qatar Investment Authority \n and Yuri Milner’s DST Global, are keeping it well-funded \n to chase furious expansion.<\/p>\n

Last year, though, while on a visit to India, Bezos trumped a \n $1 billion Flipkart funding announcement. Decked in Indian wedding \n gear, he swung Bollywood hero-style from a festooned truck, posed \n for cameras and handed a $2 billion check to the India unit.<\/p>\n

India had “surpassed” his expectations by hurtling \n past the $1 billion sales mark within 12 months of launch, the \n fastest billion anywhere in the world for Amazon, said Bezos. \n “We’ve never seen anything like this.”<\/p>\n

There are two takeoff points for Indian e-commerce. First, in \n a landline-starved country, a dramatic smartphone price drop is \n making Indians take to their devices at a frenetic pace. This \n is enabling online transactions like never before, connecting \n traders in southern India to customers in Kashmir 2,000 miles \n away and the other way around.<\/p>\n

Meanwhile, with branded brick-and-mortar retail only accounting \n for a minuscule 7% of total sales, online platforms are filling \n a breach. “In a country that, by its very nature, is entrepreneurial, \n if you take away the friction from the system, magical things \n can happen,” says Agarwal.<\/p>\n

“There was virtually no e-commerce in India even six years \n ago, but it has now reached a tipping point,” says Rajan \n Anandan, managing director of Google India. “For many people \n outside India’s eight big cities, e-commerce will offer the \n first access to a truly wide range of products and brands,” \n he predicted. Sure enough, during Amazon’s Great Indian Summer \n Sale in early May, smartphone-toting buyers in unheard-of places \n ordered lacy nightwear, foreign makeup brands and gourmet Mexican \n and Thai ingredients. “India is an aspirational market, but \n would a Godrej Nature’s Basket [the country’s biggest retailer \n of gourmet foods] have the courage to open outside the biggest \n cities?” asks Agarwal. Orders quintupled, and many small \n merchants catapulted into the million-dollar (in revenues) club. \n “Our vast selection of products is our biggest differentiator,” \n says Amit Deshpande, Amazon India’s director of seller services.<\/p>\n

Despite India’s rudimentary logistics chain, the international \n e-tailer offers timed deliveries for appliances and overnight, \n same-day and even Sunday deliveries in 100 Indian cities. Agarwal \n recounts that Diego Piacentini, a Seattle-based boss of global \n consumer business, ribs him, “You can’t even estimate \n the time it takes to get from the airport to the office and you’re \n offering guaranteed delivery to customers!”<\/p>\n

At the delivery end each big online retailer in India innovates \n in remarkable ways. Flipkart has tied up with Mumbai’s hoary \n lunch carriers, the dabbawallas, for last-mile delivery. It is \n contemplating experimenting with delivery drones in rural India. \n Amazon won’t be left behind; it’s using postmen, gas \n stations and local shopkeepers.<\/p>\n

The parent’s financial heft may ease some of the pressure \n on Amazon India, and Agarwal has his own know-how from years of \n directing international operations in Seattle: “My team worked \n to bring sellers on to the Amazon platform–there was no notion \n of a marketplace back then; my team invented the ‘marketplace’ \n to be a single, seamless experience for sellers.”<\/p>\n

In India, Amazon has 2.5 million cubic feet of warehouse space \n in 11 “fulfillment centers” across nine Indian states, \n where 700,000 SKUs, or distinct items from books to plants, are \n stored. Agarwal says, “We look at this operation in a manufacturing \n sort of way–traders bring in the ‘raw material’ \n while we manage the variables both on the supply and the demand \n side.”<\/p>\n

But this is India and the items could arrive on bicycle, by foot \n or by truck. Defect-checking, storing items in dusty, humid or \n extremely hot conditions, handling movement among India’s \n 29 states–all make for what Agarwal calls a “mind-boggling \n operation.” Technology helps: For instance, when sellers \n sign up, algorithms chart their risk profile.<\/p>\n

Regulatory and tax issues are uniform vexations. In the southern \n state of Karnataka, where Bangalore is the capital, Amazon is \n threatening to shut down its hub after the government slapped \n several of its vendors with a $9 million tax arrears notice. Brick-and-mortar \n retailers, like Kishore Biyani of Future Group, are asking how \n e-commerce’s “platforms,” which they say are only \n different in name, are allowed foreign investment when foreign \n direct investment in retail is otherwise very tightly regulated.<\/p>\n

Amazon is famously willing to endure red ink as long as there \n is consistent growth in the market. It has $2 billion in capital \n to run through in India in the next few years. “The bulldozer \n has deep pockets and has forced its competitors to raise further \n rounds of overseas funds,” says consultant Abikzir.<\/p>\n

None of the market stress is showing on Agarwal’s boyish \n face yet, not even the undoubtedly irksome fact that the biggest \n fight is with Flipkart, set up by the former Amazon pair. Instead, \n the executive points to Amazon’s customer-centric flywheel: \n Great customer experience leads to more traffic, in turn attracting \n more sellers and leading to a better selection, which then leads \n back to happy customers. “It is all about transforming the \n way India buys and the way India sells,” offers Agarwal. \n Bezos wouldn’t say it less grandly.<\/p>\n

(Published in Forbes \n Asia<\/a>.)<\/i> <\/p>\n","protected":false},"excerpt":{"rendered":"

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